Institutions, according to Samuel P. Huntington, are "stable, valued, recurring patterns of behavior". Further, institutions can refer to mechanisms of social order, which govern the behaviour of a set of individuals within a given community. Moreover, institutions are identified with a social purpose, transcending individuals and intentions by mediating the rules that govern living behavior. According to Geoffery M. Hodgson, it is misleading to say that an institution is a form of behavior. Instead, Hodgson states that institution are ăintegrated systems of rules that structure social interactions.
People may deliberately create individual, formal organizations commonly identified as "institutions"´but the development and function of institutions in society in general may be regarded as an instance of emergence. That is, institutions arise, develop and function in a pattern of social self-organization beyond conscious intentions of the individuals involved.
As mechanisms of social interaction, institutions manifest in both formal organizations, such as the U.S. Congress, or the Roman Catholic Church, and, also, in informal social order and organization, reflecting human psychology, culture, habits and customs, and encompassing subjective experience of meaningful enactments. Formal institutions are explicitly set forth by a relevant authority and informal institutions are generally unwritten societal rules, norms, and traditions.
While institutions tend to appear to people in society as part of the natural, unchanging landscape of their lives, study of institutions by the social sciences tends to reveal the nature of institutions as social constructions, artifacts of a particular time, culture and society, produced by collective human choice, though not directly by individual intention. Sociology traditionally analyzed social institutions in terms of interlocking social roles and expectations. Social institutions created and were composed of groups of roles, or expected behaviors. The social function of the institution was executed by the fulfillment of roles. Basic biological requirements, for reproduction and care of the young, are served by the institutions of marriage and family, for example, by creating, elaborating and prescribing the behaviors expected for husband/father, wife/mother, child, etc.
Secondly, how do institutions affect behaviour? In this perspective, the focus is on behaviour arising from a given set of institutional rules. In these models, institutions determine the rules (i.e. strategy sets and utility functions) of games, rather than arise as equilibria out of games. Douglass North argues, the very emergence of an institution reflects behavioral adaptations through his application of increasing returns. Over time institutions develop rules that incentivize certain behaviors over others because they present less risk or induce lower cost, and establish path dependent outcomes. For example, the Cournot duopoly model is based on an institution involving an auctioneer who sells all goods at the market-clearing price. While it is always possible to analyze behaviour with the institutions-as-equilibria approach instead, it is much more complicated.
Ian Lustick suggests that the social sciences, particularly those with the institution as a central concept, can benefit by applying the concept of natural selection to the study of how institutions change over time. By viewing institutions as existing within a fitness landscape, Lustick argues that the gradual improvements typical of many institutions can be seen as analogous to hill-climbing within one of these fitness landscapes. This can eventually lead to institutions becoming stuck on local maxima, such that for the institution to improve any further, it would first need to decrease its overall fitness score (e.g., adopt policies that may cause short-term harm to the institution's members). The tendency to get stuck on local maxima can explain why certain types of institutions may continue to have policies that are harmful to its members or to the institution itself, even when members and leadership are all aware of the faults of these policies.